1. Field of the Invention
The present invention generally relates to financial transactions and more particularly to facilitating COD transactions through an on-line payment provider.
2. Related Art
With the ever-increasing popularity of the Internet and of Internet commerce, both consumers and sellers are using the Internet to facilitate financial transactions between buyers and sellers. In on-line financial transactions, consumers may use third-party payment service providers to pay for products and services through electronic communications with online merchants over electronic networks, such as the Internet. The third-party payment providers provide infra-structure, software, and services that enable member buyers and member sellers or merchants to make and receive payments. The payments may be credit card payments, electronic bank transfers, or other payment techniques offered by the third-party payment provider. One payment technique may be transferring money from an account held by the payment provider, as opposed to transferring credit from an outside credit card company or an outside financial institution or bank. Transferring money held in the payment provider account may be cheaper for a user because it avoids certain transaction fees or interest payments that may be incurred when transferring money or making a payment from an outside credit or banking institution. This method may also be preferable to a seller due to more security or different kinds of assurances for the seller who wants to make sure they are not subject to charge-backs.
One problem payment providers cannot control is the delivery of goods to the proper buyer after a transaction has been agreed upon between the buyer and seller. For example, if buyer makes a payment to the seller through the payment provider, but the buyer never receives the purchased item or receives an unacceptable item, the buyer may not have many remedies, especially if the seller or the seller's account can no longer be reached or accessed by the payment provider. A seller may also want to minimize or eliminate charge-backs from purchases and ensure they are paid entirely for the sale.
Cash or collect on delivery (COD) is one way to ensure a purchased item is received. COD, as is commonly defined, is a financial transaction where the products and/or services received are paid for at the time of actual delivery rather than in advance. Once the item is delivered, the buyer provides a form of payment to the person delivering the item, which may be a third party or the seller. The payment can be cash, check, credit card, or other type of payment.
However, there are disadvantages to the buyer, seller, and delivery company with a COD transaction. For the buyer, the buyer must have sufficient cash or an acceptable form of payment. The buyer may also need exact change, and the clerk at the receiving desk may need to have the check/money ready when the package arrives and link the delivery to the exact payment. For the seller, the payment may be fraudulent, such as a non-cashable check or a fraudulent credit card number. For the delivery company, the payment from the buyer may be lost or unacceptable to the seller, resulting in a loss to the delivery company. Another potential problem is the item being delivered to the wrong person, where the person ends up signing for and making payment for the delivery. This may be problematic for the delivery company, the seller, and the intended buyer.
Another pitfall of the current COD process is the wait time for the shipping company to collect/cash the check and for the sender to actually get the cash.
Therefore, there is a need for a way to make a financial transaction without the disadvantages associated with the above described methods.